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Thursday, 20 June, 2002, 20:48 GMT 21:48 UK
US gets tough on accountants
The US financial watchdog is to set up a new body to oversee the accounting industry.

The decision comes after regulatory bodies were heavily criticised for failing to intervene in the Enron/Andersen scandal.

The government is desperate to avoid a repeat performance, and to restore investor trust in corporate America.

Energy giant Enron collapsed late last year after admitting that it had vastly overstated its results for five years.

Andersen, the auditor in charge of approving Enron's accounts, was heavily criticised for failing to flag up irregularities in the energy firm's books.

Accountants at work

The proposed body will have the authority to discipline audit firms guilty of misconduct by imposing fines or suspending them.

Three of the nine places on the board will be allocated to the audit industry.

While the three non-independent board members will not vote on disciplinary issues, practising accountants are likely to carry out much of the fieldwork leading to other sanctions.

US Congress has also been trying to pass legislation to beef up oversight of the accounting industry.

The new body will be called the Public Accountability Board (PAB) and will come under the umbrella of the Securities and Exchange Commission.


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